The Third Outline Perspective Plan (Opp3)
Parliament, 3 April 2001 

Before I table the Third Outline Perspective Plan (OPP3) for 2001 - 2010, I would like to draw the attention of the House to Malaysia's record of development since independence. As a multi-racial, multi-religious and economically divided nation, Malaysia was a nation least expected to remain peaceful and to develop. There were dire predictions, that racial conflicts would be a permanent feature and the Malays who made up the majority would seize power and rob the other communities. In the event we have proven our detractors totally wrong. 

2. For this remarkable achievement the whole nation must thank the greatest Malaysian leader of all, The Late Honourable Tunku Abdul Rahman Putra Al-Haj. It was he who devised the special inter-racial cooperation which today is being copied not only in this country but also many other developing countries with ethnic divides. Without losing their racial identities, the various ethnic political parties were able to ride under the banner of an Alliance which functions more like a single party than a coalition of parties. 

3. This is the formula which brought about stability and economic development in Malaysia. If Malaysia is to continue to be peaceful and to grow rapidly, it is important that the protagonists of this unique system of racial cooperation should stay in power. Synthetic copies are most unlikely to achieve the same results. 

4. Unfortunately the original practitioners of racial cooperation are now faced with the politics of hatred, religious deviationism, racism and street violence. It is difficult to understand why people in a peaceful rapidly developing Malaysia should want to imitate the ways of countries which have not been able to stay peaceful and to develop. But the fact is that some in Malaysia are not happy that the country is peaceful and the economy is doing well. They hanker after turmoil and violence, injury and death even. They are forever looking for issues and incidents to exploit. While they propound democracy, they are not prepared to accept the decision of the majority. They are not prepared to wait for general elections but wish to grab power illegitimately. 

5. Recently a fight broke out between a few Malays and a few Indians. Immediately certain people tried to influence feelings among both communities in order to break the peace that Malaysia enjoys. It is well-known that certain individuals wish to see the Malaysian Government fall through street violence. They had intimated this to their foreign sympathisers. But this Government will not hesitate to enforce Malaysian laws even if we will be condemned by the foreign media and certain foreign quarters. 

6. Malaysia's well-being is the responsibility of the Malaysian people and their elected Government. We have shown that when Malaysian interests are at stake we are ready to break from the so-called international norm. We know that our critics and detractors are no angels and when it suits them, they will ignore common decency even. And so if the peace and stability of this country is threatened, having foreign friends to back their illegal acts will not save them from the full force of Malaysian laws. This Government will act and act decisively to protect this country from foreign manipulations and their proxies in this country. 

7. As I pointed out Malaysia has developed rapidly since independence. This has been achieved despite continuous opposition and harassment by the opposition every step along the way. Every project to improve the living standard of the people has been condemned, opposed and obstructed. 

8. Thus when the Government developed the Muda Irrigation Scheme (MADA) for padi double-cropping, the Opposition condemned it as impractical, the land is not allowed to fallow, the padi farmers would have to work throughout the year. Today the very people who opposed MADA not only enjoyed the extra income they got but would get angry if they cannot do double cropping. 

9. It is the same with all the other policies and projects. If their opposition is acceded to there would be no Penang Bridge, no North-South and other expressways, no Subang Airport and KLIA, no Proton, no DEB, no Malays in business, and certainly none in the corporate sector or the professions. In fact bereft of all these Malaysia would be a Third World basket case, begging for aid and being forced to obey foreign powers and international agencies. We can see the kind of country we would be by looking around us. 

10. Fortunately the Alliance and the Barisan Nasional Government were given overwhelming support by the people and we were able to ward off opposition from the opposition parties and develop the country and enrich the people. 

11. The OPP3 outlines the policies and direction of Malaysia's development in the next 10 years. The National Vision Policy will be opposed by the Opposition because all the Opposition knows is to oppose. They have never come up with any constructive ideas to help the country develop. 

12. The Barisan Nasional Malaysian Government will not be deterred by the negative attitude of the Opposition. We will definitely carry out the National Vision Policy with all the means in our power for the good of Malaysia and all Malaysians. 

13. It is with this awareness that the Opposition will raise baseless criticisms during the debate on the Third Outline Perspective Plan and the National Vision Policy and will deliberately prevent Malaysia's development that I will present the OPP3, to take the country further towards Vision 2020, a Malaysia that is fully developed and at par with other developed countries. 

14. I beg to move the following motion:- " That this House, recognising the significant progress made in the socio- economic development of the nation during the last ten years under the Second Outline Perspective Plan 1991- 2000 and the National Development Policy; acknowledging and endorsing the continuous efforts of the Government in implementing policies, strategies and programmes in order to achieve the objectives of the Second Outline Perspective Plan through the National Development Policy, that is to attain balanced development in order to establish a more united and equitable society; approves and endorses the Third Outline Perspective Plan, 2001-2010 and the National Vision Policy, which seek to provide respectively the development objectives of the nation and the policies that will be followed in this decade, as set out in Command Paper No. 11 of 2001; that in approving the Third Outline Perspective Plan and the National Vision Policy, all segments of Malaysian society are required to relentlessly strive for greater success in the face of increasing domestic and global challenges ahead, and stand united in our efforts to build a resilient and competitive nation. " 

15. With your permission, I, therefore, table the Third Outline Perspective Plan (OPP3) (2001-2010) and the National Vision Policy for deliberation by Honourable Members of this House. 

16. The OPP3 document before us is of special significance for succeeding generations and for us. It is tabled at the beginning of the 21st century and contains policies and programmes that will be implemented in the first decade of the century. Having attained remarkable success since the launching of the New Economic Policy (NEP) and the National Development Policy (NDP), we should forge ahead with determination to attain the objectives so that the rakyat who have placed their faith in this Government will not be disappointed. 

17. In Malaysia, we take planning for national development very seriously. For us, plans are important to set out the course for the nation to take in its development. The seriousness with which we undertake development planning in Malaysia is best demonstrated by the efforts that are made in the preparation of OPP3. 

18. In the formulation of OPP3, we established the Second National Economic Consultative Council (MAPEN II), which was composed of 154 members representing various sections of the Malaysian society. Their ability to deliver the final report on time enabled the Government to consider the views expressed before formulating the plan. Although it was not possible to accept all the recommendations, the Government in full earnestness and sincerity had considered all the proposals carefully. 

NATIONAL DEVELOPMENT POLICY 

19. The National Development Policy (NDP), which was launched in 1991 to succeed the NEP, set the broad economic development framework for the last 10 years. While maintaining the basic strategies and broad objectives of the New Economic Policy (NEP), the NDP incorporated several new dimensions, namely, focus on hardcore poverty, emphasis on the rapid development of an active Bumiputera Commercial and Industrial Community (BCIC), greater reliance on the private sector to achieve the restructuring objective, and the strengthening of human resource development. 

MACROECONOMIC PROGRESS 

20. The policies and strategies of the NDP contributed towards strengthening Malaysia's position as a modern industrial economy and brought significant economic and social progress. The country witnessed improving standards of living and the strengthening and diversification of its industrial base. The economy, however, suffered a severe setback in 1998 due to the Asian financial crisis, but as a result of the measures introduced by the Government and the strong economic fundamentals existing before the crisis, we succeeded in turning around the economy within a short period of time and were able to place it on a much stronger footing to face future challenges. 

21. Despite the crisis, the economy achieved an average growth rate of 7.0 per cent per annum for the period 1991-2000, as targeted under OPP2. More importantly, growth was achieved in an environment of low inflation, price stability and full employment. The per capita income increased at an average rate of 7.8 per cent per annum and doubled from RM6,298 to RM13,359 between 1990 and 2000. 

22. The impetus for the strong growth during the decade came from the private sector as well as exports, unlike the high level of public sector involvement in the economy in the 1980s. This was in keeping with Government strategy to promote the private sector as the engine of growth. 

23. In addition, the large inflow of foreign direct investment (FDI) into the manufacturing sector added capacity in the export-oriented industries, including the oil, gas and petrochemical sector and investments in capital-intensive and high technology areas, and contributed to the higher rate of private investment. The inflow of FDI remained steady even during the crisis. We managed to get greater amount of reinvestments from the MNCs that had already established their operations here. This demonstrates the continued confidence of foreign long-term investors in our economy. It is also encouraging to note that a major portion of the FDI inflows was in high technology industries as well as in the IT sector which is currently being emphasised. 

24. Private investment was severely affected in 1998 as a result of the decline in demand and loss in investor confidence resulting from the financial crisis. To reduce the severity of the economic contraction, the Government adopted a fiscal stimulus package and an accommodative monetary policy. Public investment focused on infrastructure development and enhancing productivity and efficiency to support private sector initiatives and fulfil the rising demand for better services from an increasingly sophisticated society. 

25. Exports also became an increasingly important contributor to growth. Locally made products were able to compete successfully and penetrate global markets, including the developed countries. Exports were particularly crucial in propelling the recovery from the financial crisis. Exports grew at an average rate of 16.7 per cent and became even stronger between 1998- 2000, surpassing the target set under the Second Outline Perspective Plan. 

26. The Asian financial crisis had to some extent affected the achievement of socio-economic goals. However, Malaysia emerged more resilient and fundamentally stronger after the crisis. The current account of the balance of payments turned around and strengthened following significant growth in merchandise exports. The merchandise account recorded the largest surplus ever of RM86.5 billion in 1999. 

27. The Government was committed to contain the external debt at a manageable level and, therefore, selectively prepaid its more expensive external loans. As a result, the external debt of the Federal Government declined from RM24.7 billion at the end of 1990 to RM13 billion at the end-1997. However, as a result of the financial crisis, the Government raised a small amount of funds from external sources to undertake counter-cyclical spending for Malaysia's economic recovery. 

SECTORAL PERFORMANCE 

28. In sectoral terms, manufacturing grew at 10.4 per cent per annum and led economic growth during the OPP2 period. The sector witnessed improvements in productive efficiency and capability, continued expansion of export-oriented industries as well as greater diversification of its market. 

29. Growth of the construction sector was particularly rapid during the 1991-1997 period. The civil engineering sub-sector was boosted by the privatisation of large infrastructure and civil engineering projects, such as roads, highways, airports, power generation, telecommunications, rail transport and ports. However, the construction sector contracted in 1998 and 1999, before recovering slightly in 2000. 

30. Growth in the agriculture sector mainly came from the palm oil and food crop sub-sectors. In line with the Third National Agriculture Policy (NAP3), the development of the sector was reoriented towards the optimal utilisation of resources in both the industrial commodity and food sub-sectors through improvements in productivity and competitiveness. 

31. The Government also took steps to develop the services sector as a new source of growth as well as to improve the competitiveness of the services industries in preparation for an increasingly liberalised environment. 

PROGRESS IN POVERTY ERADICATION AND RESTRUCTURING 

32. The nation achieved significant progress in terms of poverty eradication, restructuring of employment and the development of the Bumiputera Commercial and Industrial Community. Corporate equity ownership by Bumiputera, however, declined marginally compared with the 1990 level. 

33. The incidence of poverty among Malaysians was reduced to 7.5 per cent in 1999. A total of 351,100 households were lifted out of poverty. The incidence of poverty in both rural and urban areas declined by almost half their levels in 1990. The incidence of poverty among the Bumiputera, however, remains highest when compared with the other ethnic groups. 

34. In terms of restructuring, the share of Bumiputera ownership of corporate capital initially increased from 19.3 per cent in 1990 to 20.6 per cent in 1995. As a result of the economic crisis, their share fell to 19.1 per cent. The share of non- Bumiputera ownership of corporate capital also declined, while the foreign ownership rose following the liberalisation of foreign investment to accelerate the recovery process. However, both the Bumiputera and non-Bumiputera registered absolute increases in their equity ownership. 

35. The privatisation programme served as an important vehicle to enhance Bumiputera participation in the corporate sector. Companies undertaking privatised projects were required to provide at least 30 per cent equity to Bumiputera as well as allocate at least 30 per cent of contract-works of major privatised projects to Bumiputera contractors. 

36. The proportion of Bumiputera in the professional and technical as well as administrative and managerial categories increased during the period. The implementation of programmes for Bumiputera commercial and industrial community also helped to increase the number of Bumiputera enterprises in both the corporate and non-corporate sectors. 

37. In terms of regional development, states that engaged in modern sector activities grew rapidly. The greater economic opportunities available in urban centres continued to attract migrants, and as a result, there are more Malaysians living in urban areas than in rural areas. About three-fifth of Malaysians lived in urban areas in 2000 compared with about half in 1990. The increase in urban population has resulted in a new phenomenon, that is, the expansion of squatter settlements and the emergence of relative poverty in the urban areas among Bumiputera and the Indian community. 

NATIONAL VISION POLICY 

38. Ten years ago, the country adopted the Vision 2020 concept to set the country's strategic direction for the next 30 years. The successful implementation of the National Development Policy during the 1990s, which marks the first phase of Vision 2020, has enabled the country to achieve rapid growth with wide- ranging transformation of its economic, social, physical and institutional landscape. 

39. We have now moved into the second phase of Vision 2020 During the next 10 years,the National Vision Policy (NVP) will form the basis of the strategies and programmes under the OPP3. The National Vision Policy is aimed at establishing a progressive and prosperous Bangsa Malaysia that lives in harmony and engages in full and fair partnership. Economic growth will be promoted alongside efforts aimed at poverty eradication and restructuring of society, as well as reducing social, economic, and regional imbalances. While improving material welfare and raising the level of prosperity, special effort will also be made to instill positive social and spiritual values to balance rampant materialism. In addition, the National Vision Policy pursues environmentally friendly and sustainable development to ensure that the environment is clean, healthy and attractive as well as capable of sustaining the nation's needs and aspirations. 

THEME 

40. In recognition of the challenges ahead arising from globalisation, national development policies will be directed towards building a resilient and competitive nation. It will no longer be possible to use national borders to protect low-quality and high-priced products in the domestic market. We Malaysians will have to be more disciplined and competent in whatever we do in order to produce goods and services that can compete in the global marketplace. The recent financial crisis showed the importance of strategic thinking and of increasing resilience because in a borderless world, events in any part of the world can have tremendous repercussions on our country. 

41. The onset of the Information Age, a more integrated global economy and greater liberalization have changed the rules of competition. Knowledge rather than factor inputs determines a country's competitiveness. Malaysia's comparative advantage in traditional manufacturing is being challenged by dynamic lower-cost developing countries, while industrialised countries are forging ahead with their focus on knowledge and ICT. As a nation, we will have to intensify our efforts to increase our productivity and competitiveness not only to stay ahead of the developing countries but also to catch up with the more developed countries, so that we can emerge as a developed nation come 2020. 

42. Domestically, our total factor productivity the contribution of factors other than labour and capital is still low and the rising incremental capital output ratios during the 1990s mean that we need to intensify our efforts to increase the efficiency of capital utilisation. Our strategy for sustained growth must be built on the basis of increased productivity arising from high knowledge content and efficiency. There is the need to identify new growth areas, broaden and deepen the existing sources of growth, and widen the range of exports as a strategy to increase economic resilience. This will include the development of the food industry, supported by a modern agriculture sector. 

43. In addition, Malaysians should always be mindful of the peace and harmony that the country is blessed with. Peace and harmony form the bedrock on which all our development efforts are built. There could be no real progress if the country is torn apart by dissension and strife. Accordingly, we should forge national unity and nurture a tolerant and caring society for the well-being and prosperity for all. If our plea for rationality in the expression of dissatisfaction over political, economic or social issues are ignored, we must accept the need for a stricter enforcement of the laws of the country. 

NEW DIMENSIONS 

44. While incorporating the key strategies of previous policies, such as the New Economic Policy and National Development Policy, the new dimensions of the National Vision Policy are as follows: developing Malaysia into a knowledge-based society; generating endogenously-driven growth through strengthening domestic investment and developing national capability, while continuing to attract foreign direct investment (FDI) in strategic areas; increasing the dynamism of agriculture, manufacturing, and services sectors through greater infusion of knowledge; addressing pockets of poverty in remote areas and among Orang Asli and Bumiputera minorities in Sabah and Sarawak as well as increasing the income and quality of life of those in the lowest 30 percent income category; achieving effective Bumiputera participation as well as equity ownership of at least 30 percent by 2010; increasing the participation of Bumiputera in the leading sectors of the economy; and reorientating human resource development to support a knowledge-based society. 

KEY THRUSTS 

45. The National Vision Policy will help to strengthen the country's competitiveness and resilience, as well as build an equitable society to ensure stability and unity. The key thrusts of the National Vision Policy are as follows: building a resilient nation by fostering unity, inculcating the spirit of patriotism, nurturing political maturity, cultivating a more tolerant and caring society with positive values, raising the quality of life, as well as increasing economic resilience; promoting an equitable society by eradicating poverty and reducing imbalances among and within ethnic groups as well as regions; sustaining economic growth by identifying and strengthening the sources of growth, the financial and corporate institutions as well as macroeconomic management; enhancing competitiveness to meet the challenges of globalisation and liberalisation; developing a knowledge-based economy as a strategic move to raise the value added of all economic sectors and optimising the brain power of the nation; strengthening human resource development to produce a competent, productive and knowledgeable workforce; and pursuing environmentally sustainable development to ensure long-term growth. 

BUILDING A RESILIENT NATION 

46. For the nation to be resilient, the people will have to be united, politically mature, tolerant, caring and enjoy a higher quality of life. 

47. Malaysians should strive for political maturity and not be sidetracked into parochialism and extremism in their views. For a united and harmonious Malaysian society, there should be tolerance and acceptance of the diverse traditions of our multicultural society. 

48. To succeed as a nation, we must be prepared to work hard and work smart, be disciplined and have good work ethics. We should uphold good values and ethics of the people and the nation because in the final analysis, they determine the rise or fall of a nation. 

ECONOMIC PROSPECTS FOR 2001-2010 GLOBAL ECONOMIC PROSPECTS 

49. Let me touch on briefly the prospects for the global economy. 50. The long-term outlook for the global economy is expected to be positive with real GDP growth projected to increase in all major regions. The world economy is expected to expand by 2.3 percent annually between 2001-2010, while the developing countries are also expected to grow at an average rate of 3.7 percent. Nevertheless, the presence of economic and financial imbalances between rich and poor is significant and poses continued risk to the Malaysian economy. The continued lack of constructive initiatives to strengthen the international financial architecture,particularly in respect of the increased movement of speculative short-term capital, remains a potential source of instability. 

SUSTAINABLE ECONOMIC GROWTH 

51. Given this outlook, Malaysia's ability to sustain rapid economic growth for the OPP3 period will hinge on our ability to strengthen economic resilience and competitiveness. As such, the focus of macroeconomic management will be to strengthen economic fundamentals so as to ensure sustainable long-term growth with low inflation and stable prices, as well as maintaining a healthy resource and external balance position. The development of the knowledge-based economy is expected to provide a platform to improve Malaysia's productivity. 

PRODUCTIVITY AND EFFICIENCY 

52. During the OPP3 period, the economy is targeted to grow at an average annual rate of 7.5 percent. The major source of growth will be from productivity gains arising from improvements in technology and production process as well as increased use of information and communication technology(ICT). New domestic and foreign investments will also contribute to economic growth. 

53. To build a strong base for an endogenously-driven growth, efforts will be made to strengthen indigenous capabilities in innovation and technology development as well as human capital. Measures will be taken to improve the level of education, intensify skills training, and attract highly specialised foreigners and Malaysians abroad as part of our "brain gain" strategy. 

AGGREGATE DEMAND 

54. Private consumption is expected to increase at 7.4 percent annually in real terms due to higher disposable income and positive wealth effect. With policies to strengthen investment, private investment is expected to register a strong average growth rate of 12.7 percent. Foreign direct investment will continue to be promoted, especially in capital- intensive and high-technology industries. Domestic investments will be further promoted to accelerate the development of local industries as well as create Malaysian multinational corporations (MNCs) in order to broaden the industrial base and composition. This will include enhancing Malaysia's resource-based and food industries which have potential for import substitution and export. 

55. In this regard, local businesses and institutions are encouraged to collaborate with foreign businesses to form strategic alliances in R&D, product design, production, distribution and marketing. They should manufacture capital and intermediate goods in areas where Malaysia has competitive advantage to supplement and substitute for the import of such goods and also for export. Malaysian businesses should strengthen their linkages with MNCs in order to take advantage of global outsourcing and be part of the global value chain. 

56. The development